vertex spinning ltd Management discussions

OVERALL REVIEW OF ECONOMY

The global economy is showing signs of a turnaround with Asian economies experiencing a relatively stronger rebound. However, significant risks remain: (1) in many economies, the recovery is largely driven by government spending whilst consumer sentiments remain fragile; (2) high levels of global liquidity have led to steep increases in commodity prices; (3) emerging markets are likely to face increased inflationary pressures and (4) developed economies are facing large budget deficits.

There are concerns that the global recovery phase may be fragile, as economies of developed countries, particularly USA and Europe, continue to be beset with the problems of high unemployment, low consumer spending and depressed housing markets. Besides, the recent crisis in Portugal, Ireland, Spain and Greece indicate that there would be many pitfalls along the road to recovery and that normalcy is still some time away.

India’s growth-inflation dynamics are in contrast to the overall global scenario. The Indian Economy is recovering steadily from the growth slowdown, but inflationary pressures, triggered by the supply side factors, have developed into a wider inflationary cycle.

Although the growth momentum of the Indian economy was substantially impacted with the onset of the global economic slowdown, the severity of the impact was considerably less when compared to most developed economies. The fiscal and monetary policies implemented by the Government of India helped the economy to weather the downturn phase.

TEXTILE INDUSTRY OVERVIEW

The Indian Textile Industry is one of the Leading Textile Industries in the World. The textiles and apparels sector is a major contributor to the Indian Economy in terms of Gross Domestic Product (GDP), industrial production and the country’s total export earnings. India earns about 27 per cent of its total foreign exchange through textile exports. Besides, the Indian Textile Industry contributes 16 per cent of the total industrial production of the Country. This sector provides employment to over 37 million people and it is expected that the textile industry will generate new jobs during the ensuing years.

The industry went through a challenging FY 2015, with the global meltdown ravaging economies. The collapse in consumer sentiments, weak exports, noteworthy drop in discretionary spending in textiles / apparels and down trading by the consumers put immense pressure on both the top-line and the bottom-line of textile companies.

OUTLOOK, OPPORTUNITIES AND THREATS

In the backdrop of the financial crisis witnessed in the previous financial years and the subsequent fallout, FY 2015 was an extremely challenging year for your Company. However, the resilience and inherent strengths of your Company’s brands, quality manufacturing and deep network relationships enabled your Company to weather the downturn and achieve better performance in FY 2015.

During the year under review the sales turnover of the Company was in growth trajectory and touched Rs.28,96,884/- as compared to previous years of Rs. 8,022,259/-.

The Company has coming with Asia’s biggest VERTEX INTERGRATED TEXTILES PARK project at Nardhan, Dist. Dhule (MH). The project comprises Industrial, Residential and other required facility such as School, College, Five Star Hotel, Hospital, Shopping Complex etc., is located at total 400 acres land at Nardhan Industrial Area, Dist. Dhule (MH). The development activities of the area is of about to completion and 10 Kilometres of internal roads, a 5 Megawatt MSEB sub-station out of the planned 100, water facilities, street lamps etc. are their place. The sale of plots for Textile Park is started. The project which commence in 2006 expects to be completed by mid 2016 as per present plans.

The Company is undertaking continuous endeavors for expansion of its domestic and overseas customers by implementing new facilities. For establishing manufacturing facilities. Your Company has started work for its Nardhana Plant. The Company has already purchased land situated at MIDC, Nardhana Industrial Area, Dist. Dhule and taking off possession from MIDC Authorities. The power and water has reached to the site and the company will start building construction activity their. The company will expected to start production activity their in the next Financial year 2015-16.

On the other hand, value buying by consumers, sharp increase in raw material prices, continued weakness in developed geographies, prospect of higher domestic inflation and interest rates are some of the challenges facing the textile industry at large.

CORPORATE SOCIAL RESPONSIBILITY

An essential component of our corporate social responsibility is to care for the community. We Endeavour to make a positive contribution to the underprivileged communities by supporting a wide range of socio-economic, educational and health initiatives. Many of the community projects and programs are driven by active participation from our employees. Our commitment to address important social needs extends throughout our philanthropic outreach programs.

Health and Education have been identified as the primary objective of the community development process. The foundation works relentlessly to ensure improvement of general health and spread no-formal education among all members in the community. A number of focused initiatives have been implemented to bring about general health awareness and improve the level of education.

SOCIAL WELWARE

The Company is not only committed to promote the welfare of the employees but also the society at large. Community activities are regularly undertaken at the company’s plant location. Various Sports Tournament and Cultural Program have been sponsored. Health Awareness Camps and AIDs Awareness Rallies have been also sponsored. Contribution has been made for the Flag Day Fund, and Note Books have been distributed in schools in the surrounding areas.

ENVIORMENT EFFORTS

The Company is conscious of the importance of environmentally clean and safe operations. The Company’s policy requires the conduct of all operations in such manner so as to ensure safety of all concerned, compliance of statutory and industrial requirements for environment protection and conservation of natural resources to the extent possible.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

Your Company believes in formulating adequate and effective internal control systems and implementing the same strictly to ensure that assets and interests of the company are safeguarded and reliability of accounting data and accuracy are ensured with proper checks and balances. The Internal control system is improved and modified continuously to meet the changes in business conditions, statutory and accounting requirements.

The Audit Committee of the Board of Directors, Statutory Auditors and the Business Heads are periodically apprised of the internal audit findings and corrective actions taken.

The Audit Committee of the Board of Directors actively reviews the adequacy and effectiveness of internal controls systems and suggests improvements for strengthening them. The Company has a robust Management Information System which is an integral part of the control mechanism.

MATERIAL DEVELOPMENT IN HUMAN RESOURCES/INDUSTRIAL RELATIONS FRONT

The Industrial relations remained good across all locations. Human resource continued to be recognized as the most valued asset. The Company is adequately manned with professionals in the field of Engineering, Finance and Administration etc. In order to meet the challenge of Growth and New Product Line, the company has organized In-House Training of its staff and workmen to improve soft skills, technical knowledge, work culture and efficient manufacturing practices.

The Company has formed work committee in order to increase workers participation in the management. This initiative has paid dividends and the company has experienced improvement in efficiencies, overall workmen satisfaction and stability.

CAUTIONARY STATEMENT

Statements in the Management Discussion and Analysis Report describing the Company’s objectives, projections, estimates, expectations or predictions may be “forward-looking statements” within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the company’s operations include raw material availability and prices, cyclical demand and pricing in the company’s principal markets, changes in Government regulations, tax regimes, economic developments within India and the countries in which the company conducts business and other incidental factors.

For and on behalf of Board of Director

Sd/-

Suresh Sharma

Chairman

Place: Mumbai

Date: 01^st September 2015

Registered Office:

1011, Embassy Centre, 207,

Nariman Point, Mumbai-400 021.